nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2017‒09‒03
twelve papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Are Ideas Getting Harder to Find? By Michael Webb; John Van Reenen; Charles Jones; Nicholas Bloom
  2. Invention Machines: How Control Instruments and Information Technologies Drove Global Technologigal Progress over a Century of Invention By Koutroumpis, Pantelis; Leiponen, Aija; Thomas, Llewellyn D W
  3. Product markets’ deregulation: a more productive, more efficient and more resilient economy? By Gustavo Monteiro; Ana Fontoura Gouveia; Sílvia Santos
  4. The Structure and Performance of U.S. Research Joint Ventures: Inferences and Implications from the Advanced Technology Program By James D. Adams; Albert N. Link
  5. R&D policy regimes in France: New evidence from a spatio-temporal analysis By Benjamin Montmartin; Marcos Herrera; Nadine Massard
  6. Essays on Empirical Industrial Organization : Entry and Innovation By Fernandez Machado, Roxana
  7. Understanding the Global Dynamics of Sectoral Labor Productivity By Roberto Roson
  8. Are R&D companies credit-constrained? Credit frictions during and post-crisis By Kadri Männasoo; Heili Hein
  9. Identifying technological sub-trajectories in photovoltaic patents By Martin Kalthaus
  10. Growing Large or Growing old? A New Perspective on the Firm Life Cycle By Giuseppe Moscarini; Emmanuel Dhyne; Costas Arkolakis
  11. Firms' Costs, Profits, Entries, and Innovation under Optimal Privatization Policy By Haraguchi, Junichi; Matsumura, Toshihiro
  12. Small and Large Firms over the Business Cycle By Neil Mehrotra; Nicolas Crouzet

  1. By: Michael Webb (Stanford University); John Van Reenen (Sloan School of Management, MIT); Charles Jones (Stanford University); Nicholas Bloom (Stanford)
    Abstract: In many growth models, economic growth arises from people creating ideas, and the long-run growth rate is the product of two terms: the effective number of researchers and the research productivity of these people. We present a wide range of evidence from various industries, products, and firms showing that research effort is rising substantially while research productivity is declining sharply. A good example is Moore’s Law. The number of researchers required today to achieve the famous doubling every two years of the density of computer chips is more than 75 times larger than the number required in the early 1970s. Across a broad range of case studies at various levels of (dis)aggregation, we find that ideas — and in particular the exponential growth they imply — are getting harder and harder to find. Exponential growth results from the large increases in research effort that offset its declining productivity.
    Date: 2017
  2. By: Koutroumpis, Pantelis; Leiponen, Aija; Thomas, Llewellyn D W
    Abstract: Abstract Inventions depend on skills, experience, and information exchange. Information is shared among individuals and organizations both intentionally and unintentionally. Unintentional flows of knowledge, or knowledge spillovers, are viewed as an integral element of technological progress. However, little is known about the overall patterns of knowledge flows across technology sectors or over long periods of time. This paper explores whether it is possible to identify “invention machines” – technologies that help create new inventions in a wide range of other sectors – and whether shifts in the patterns of knowledge flows can predict future technological change. In the spirit of big data we analyze the entire PatStat database of 90 million published patents from 160 patent offices over a century of invention and exploit variation within and across countries and technology fields over time. The direction and intensity of knowledge spillovers measured from prior-art citations highlight the transition from mechanical to electrical instruments, especially industrial control systems, and the rise of information and communication technologies as “invention machines” after 1970. Most recently, the rapidly increasing impact of digital communications on other fields may herald the emergence of cloud computing and the industrial internet as the new dominant industrial paradigm.
    Keywords: Innovation, patents, electrical instruments, instruments, information technology
    JEL: O32 O31 O12
    Date: 2017–08–23
  3. By: Gustavo Monteiro; Ana Fontoura Gouveia; Sílvia Santos
    Abstract: This paper assesses the impact of product market deregulation in upstream sectors on the productivity growth of firms in downstream sectors (i.e. those firms using the output of the reformed sectors as inputs in their production process). Relying on a firm level database for the period 2004-2014 covering all Portuguese firms, we show that reforms bring productivity gains already in the short-run and that are sustained in the long-run. The effects are more positive for those further away from the technological frontier and are also heterogeneous across sectors. In addition, reforms potentiate the exit of the least productive firms, improving the resource allocation in the economy by a process of selection – for the least productive, only those that have scope to catch-up with the frontier are able to remain. Finally, we show that the adoption of product market reforms in upstream sectors leads to a more resilient economy, better equipped to face adverse shocks.
    Keywords: Exit Rates, Growth, Product Markets, Resilience, Resource Allocation, Structural Reforms, Total Factor Productivity
    JEL: D04 D22 L43 L51
    Date: 2017–09–04
  4. By: James D. Adams; Albert N. Link
    Abstract: Research Joint Ventures (RJVs) are projects that combine the research resources of different firms. A sample of RJVs supported by the U.S. Advanced Technology Program shows that the projects yield revenues that are far less than costs. Related to this point, the RJVs are subject to commercialization delays, loss of intellectual property, and product market competition. Partner firms undertake joint research, but if they commercialize at all, they do so separately, to avoid splitting of revenues from new products. Ultimately, difficulties with the RJVs occur because frequently, firms are potential competitors.
    JEL: D23 K21 L24 O31 O34 O38
    Date: 2017–08
  5. By: Benjamin Montmartin (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique); Marcos Herrera (Universidad Nacional de Salta, CONICET - Consejo Nacional de Investigaciones Científicas y Técnicas); Nadine Massard (UGA - Université Grenoble Alpes, GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes)
    Abstract: Using a unique database containing information on the amount of R&D tax credits and regional, national and European subsidies received by firms in French NUTS3 regions over the period 2001-2011, we provide new evidence on the efficiency of R&D policies taking into account spatial dependency across regions. By estimating a spatial Durbin model with regimes and fixed effects, we show that in a context of yardstick competition between regions, national subsidies are the only instrument that displays total leverage effect. For other instruments internal and external effects balance each other resulting in insignificant total effects. Structural breaks corresponding to tax credit reforms are also revealed.
    Keywords: structural breaks,R&D investment,spatial panel,Additionality,French policy mix
    Date: 2017–07
  6. By: Fernandez Machado, Roxana (Tilburg University, School of Economics and Management)
    Abstract: The dissertation contains three essays on empirical industrial organization devoted to studying firms' strategic interaction in different settings. The first essay develops an entry model to address an important matter in the area of urban economics: the development of cities. In particular, it focuses on the food and beverage service industry in the Netherlands and investigates to what extent the presence of urban amenities produces positive spillovers on other amenities in the market. For the case of take-out places and bars, the findings show evidence of unidirectional spillover effects upon entry. The two policy experiments conducted show that taking into account this asymmetry is relevant for both new entrant firms and policy makers. The second essay analyzes the competitive dynamics of firms in the presence of first- mover advantages. Using data of the U.S. digital mobile markets, the study quantifies the advantage early movers have relative to later entrants. In particular, it measures the impact of competitors' entry on the profits of incumbents and entrants. The findings show an asymmetric competitive effect in favor of incumbents. Finally, the third essay focuses on innovation and firms’ patent portfolio choices. Patent portfolios have become an important tool for firms to compete and secure their position in the market. The essay focuses on the U.S. semiconductor industry and shows how firms of different sizes choose their technologies in relation to other firms. The main findings suggest that small- and medium-size firms replicate large firms' choices while ignoring the giants in the market. While giants' portfolios are positively related to their previous investments, they are overall independent of other types' choices
    Date: 2017
  7. By: Roberto Roson (Department of Economics, University Of Venice Cà Foscari and IEFE, Bocconi University, Milan)
    Abstract: This study provides some empirical evidence and quantification of differences in labor productivity among industries and countries. Using a recently available data base of value added per worker, country and time fixed effects are estimated first for various industries. Results are subsequently elaborated, to identify some time trends and sectoral profiles by country, which are in turn employed in a cluster analysis, summarizing some salient characteristics of industrial labor productivity in different economies.
    Keywords: Labor productivity, structural change, economic dynamics, cluster analysis
    JEL: C23 C82 O11 O47
    Date: 2017
  8. By: Kadri Männasoo; Heili Hein
    Abstract: Private research and development (R&D) and innovation activity is believed to fall below the socially optimal level. The credit constraints that R&D companies face due to asymmetric information and credit market imperfections may hinder innovation. This descriptive analysis aims to provide a comparative insight into the credit demand and supply patterns of R&D and non-R&D companies in Central and Eastern European countries during and after the Global Financial Crisis. The study uses company-level data from rounds IV and V of the Business Environment and Enterprise Performance Survey, covering the years 2007-2009 and 2012-2014. It reveals that the dependence of R&D companies on bank credit dropped significantly over the two survey rounds, mirroring substantial self-selection into R&D, with a smaller number of able and well-capitalised companies continuing R&D activity after the crisis. We do not subsequently find convincing evidence that R&D firms that remained in business after the crisis are notably credit-constrained.
    Date: 2017–08–31
  9. By: Martin Kalthaus (FSU Jena)
    Abstract: This paper proposes a search strategy for photovoltaic patents which allows to distinguish the photovoltaic system into sub-trajectories. Identifying and analyzing sub-trajectories is of particular importance for understanding micro patterns of technological change. The proposed search strategy is modular and replicable. It performs similar to leading benchmark search strategies but allows to distinguish three cell sub-trajectories and two system components. Descriptive analysis reveals that inventive activity differs between sub-trajectories. The market dominating silicon wafer cell sub-trajectory shows hardly any patented inventive activity. Country comparison reveals that Asian countries focus on the emerging cell sub-trajectory. The USA focus on the established thin-film sub-trajectory and inventive activity in Germany focuses on module components. While the proposed search strategy allows for a fine-grained analysis of inventive activity in photovoltaics, the empirical assessment of sub- trajectories in general can increase understanding of technological change and can be used to implement policy interventions at a microtechnological level.
    Keywords: Innovation, Sub-trajectory, Patent search, Photovoltaics
    JEL: O31 O34 Q42
    Date: 2017–08–30
  10. By: Giuseppe Moscarini (Yale University); Emmanuel Dhyne (National Bank of Belgium); Costas Arkolakis (Yale University)
    Abstract: We use a comprehensive administrative panel of Belgian firms to investigate the main driving forces that shape the firm life cycle. The richness and quality of the micro data on firm revenues allows us to avoid statistical bias arising from bundling domestic and foreign sales, first year calendar aggregation, merger and acquisitions, foreign ownership etc. We go beyond the existing literature in documenting in detail the dynamic patterns of firm size (revenues) by firm age and size: exit rate, the first four moments of the growth rate distribution, and autocorrelation of revenues in both log levels and log differences. This evidence reveals sharp departures from the canonical model of firm growth, where the driving force is a one-dimensional idiosyncratic Markov process. It points, instead, to models where learning is the driving force of firm growth, thus firm age plays an independent role, and observed patterns of firm dynamics by age do not arise only from selection by exit.
    Date: 2017
  11. By: Haraguchi, Junichi; Matsumura, Toshihiro
    Abstract: We investigate how cost conditions of private firms affect optimal privatization policy and private firms' profits. We find that the optimal degree of privatization is decreasing with the costs of private firms unless the public firm is fully privatized in equilibrium. A cost reduction in a private firm increases the degree of privatization and benefits for all private firms. Therefore, each private firm's profit is increasing with its rival private firms' costs, which is in contrast to the result when the degree of privatization is given exogenously. This interesting property yields two important results. The profit of each private firm can increase with the number of private firms, and the positive externality of innovation accelerates private firms' R&D.
    Keywords: partial privatization, cost-reducing R&D, asymmetric private firms, constant marginal costs
    JEL: D43 H44 L33
    Date: 2017–08–22
  12. By: Neil Mehrotra (Brown University); Nicolas Crouzet (Northwestern University)
    Abstract: We analyze the behavior of small and large firms over the business cycle, using new firm-level quarterly data from the US Census Bureau covering the balance sheets and income statements of all firms in the US manufacturing sector. We find that sales, inventory growth, and investment rates are more cyclical among smaller firms. The differential cyclicality holds after controlling for industry effects, and is driven by the behavior of firms in the top 1\% of the asset distribution. We show that the result survives when directly controlling for firm leverage, liquidity, or bank dependency, suggesting that the excess cyclicality of small firms may not be driven by differences in access to credit. Additionally, we find that independent of size, firms with zero debt exhibit less sensitivity to the business cycle than positive leverage firms. Finally, we assess the importance of the excess cylicality of small firms for aggregate fluctuations in sales, inventory, and investment.
    Date: 2017

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